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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________________ TO ________________
COMMISSION FILE NUMBER: 0000796655
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ANTS SOFTWARE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3054685
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
801 MAHLER RD, SUITE G, BURLINGAME, CA 94010
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(650) 692-0240
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common stock, as of the latest practicable date:
14,631,888 shares of common stock as of March 31, 2001
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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TABLE OF CONTENTS
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PART I. Financial Information
Item 1. Financial Statements ............................................................................................. 3-7
Item 2. Management's Plan of Operation ................................................................................... 8-9
PART II. Other Information
Item 1. Legal Proceedings ................................................................................................ 9
Item 2. Changes in Securities ............................................................................................ 10
Item 3. Defaults Upon Senior Securities .................................................................................. 10
Item 4. Submission of Matters to a Vote of Security Holders .............................................................. 10
Item 5. Other Matters .................................................................................................... 10
Item 6. Exhibits and Reports on Form 8-K ................................................................................. 10
Risk Factors............................................................................................................... 10-12
Signatures ................................................................................................................ 13
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANTS SOFTWARE INC.
BALANCE SHEETS
March 31, 2001 December 31, 2000
(Unaudited) (Audited)
----------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,422,324 $ 2,609,084
Interest receivable 4,860 4,860
Prepaid expenses 52,456 102,947
------------ ------------
Total current assets 1,479,640 2,716,891
------------ ------------
PROPERTY AND EQUIPMENT:
Computers and software 566,160 565,110
Office furniture and fixtures 26,372 26,372
Less accumulated depreciation (94,272) (65,278)
------------ ------------
Property and equipment, net 498,260 526,204
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OTHER ASSETS 3,700 3,700
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Total assets $ 1,981,600 $ 3,246,795
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 201,199 $ 261,033
Accrued legal fees 29,073 258,742
------------ ------------
Total current liabilities 230,272 519,775
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value; 100,000,000
authorized; 14,631,888 shares issued and outstanding 1,463 13,082
Common stock subscribed -- 1,815,000
Treasury Stock, 10,436 shares at cost (121,078) (121,078)
Notes receivable from officers for stock purchases (180,000) (180,000)
Additional paid-in capital 21,255,054 18,804,974
Accumulated deficit (19,204,111) (17,604,958)
------------ ------------
Total stockholders' equity 1,751,328 2,727,020
------------ ------------
Total liabilities and stockholders' equity $ 1,981,600 $ 3,246,795
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The accompanying notes are an integral part of these financial statements.
3
ANTS SOFTWARE INC.
STATEMENTS OF OPERATIONS
Three months ended March 31,
2001 2000
(Unaudited) (Unaudited)
----------- -----------
REVENUES $ -- $ --
OPERATING EXPENSES:
General and administrative expenses 1,581,757 750,171
Research and development expenses 35,656 15,271
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Loss from operations (1,617,413) (765,442)
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OTHER INCOME:
Interest Income 23,745 50,514
Other Expense (1,485) --
Other income, net 22,260 50,514
------------ --------------
LOSS BEFORE INCOME TAXES (1,595,153) (714,928)
INCOME TAXES 4,000 --
------------ --------------
NET LOSS $ (1,599,153) $ (714,928)
============ ==============
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.12) $ (0.06)
============ ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 13,890,296 12,540,665
============ ==============
The accompanying notes are an integral part of these financial statements.
4
ANTS SOFTWARE INC.
STATEMENTS OF CASH FLOWS
Three months ended March 31,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) (Unaudited)
----------- -----------
Net Loss $(1,599,153) $ (714,928)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation 29,733 558
Stock Issued for Lawsuit Settlement 137,195 --
Loss on sale of fixed assets 2,985 --
Changes in operating assets and liabilities:
Prepaid expenses 50,491 --
Accounts payable & Accrued expenses (59,834) (55,958)
Security Deposits -- (8,665)
Accrued Legal Fees (70,403) --
----------- -----------
Net cash used in operating activities (1,508,986) (778,993)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net (4,774) (91,371)
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Net cash used in investing activities (4,774) (91,371)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placement 227,000 --
Proceeds from exercise of warrants 100,000 --
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Net cash provided by financing activities 327,000 --
----------- -----------
NET DECREASE IN CASH (1,186,760) (870,364)
CASH, BEGINNING OF PERIOD 2,609,084 4,882,212
----------- -----------
CASH, END OF PERIOD $ 1,422,324 $ 4,011,847
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 4,000 $ --
----------- -----------
NON-CASH FINANCING ACTIVITY:
On February 23, 2001, the Company issued 400,000 shares of stock as settlement
of a lawsuit claim. See Note 4.
The accompanying notes are an integral part of these financial statements.
5
ANTS SOFTWARE INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements are presented in
accordance with the requirements for Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all the disclosures
normally required by generally accepted accounting principles.
Reference should be made to the ANTs software inc. (the "Company") Form
10-KSB for the eight months ended December 31, 2000, for additional
disclosures including a summary of the Company's accounting policies,
which have not significantly changed.
The information furnished reflects all adjustments (all of which were
of a normal recurring nature) which, in the opinion of management, are
necessary to fairly present the financial position, results of
operations, and cash flows on a consistent basis. Operating results for
the three months ended March 31, 2001, are not necessarily indicative
of the results that may be expected in the future.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIC NET LOSS PER SHARE - Basic net loss per share is calculated using
the weighted-average number of common shares outstanding during the
period. Diluted net loss per share is computed using the
weighted-average number of common and dilutive common equivalent shares
outstanding during the period. There were no dilutive common equivalent
shares outstanding during the periods indicated.
The following table presents the calculation of basic and diluted net
loss per share:
THREE MONTHS ENDED MARCH 31,
2001 2000
-----------------------------------
Net loss $ (1,599,153) $ (714,928)
Weighted average shares of common stock
outstanding - basic and dilutive 13,890,296 12,540,665
-----------------------------------
Basic and diluted net loss per share $ (0.12) $ (0.06)
At March 31, 2001, outstanding options and warrants for the purchase of
6,930,688 shares of common stock at prices ranging from $0.25 to $11.63
were anti-dilutive, and therefore, not included in the computation of
diluted loss per share.
3. STOCKHOLDERS' EQUITY
In the three month period ended March 31, 2001, there were 100,000
warrants exercised for $100,000, 400,000 shares issued for a legal
settlement with Hughes Hubbard & Reed LLP (See Note 4), and we
completed the sale, through a private offering, of 113,500 units at a
price of $2 per unit, each unit consisting of (i) One (1) share of
Common Stock of the Company, (ii) a warrant to purchase up to One (1)
share of Common Stock of the Company at a per share price of Three
Dollars ($3.00), exercisable until April 30, 2001, and (iii) a warrant
to purchase up to One (1) share of Common Stock of the Company at a per
share price of Four Dollars ($4.00), exercisable until August 31, 2001,
an additional 11,350 shares were issued in exchange for services
provided in relation to the private offering (See Page 9).
In December 2000 the Company re-incorporated from Nevada to Delaware
and changed its name from ANTs software.com to ANTs software inc. As
part of the re-incorporation the Company's common stock par value was
changed from $0.001 to $0.0001 and the authorized common stock was
increased from 20,000,000 to 100,000,000 shares.
6
4. LEGAL SETTLEMENT
The Company entered into a Settlement Agreement effective as of
February 23, 2001 with the law firm Hughes Hubbard & Reed LLP ("HHR")
pursuant to which the Company agreed to issue 400,000 shares of common
stock, for which the Company recognized an expense of $137,195. In
addition, the settlement satisfied accrued legal expenses of $159,267,
which had been recorded in prior periods. HHR had filed suit against
the Company in the California Superior Court claiming that the Company
breached a June 1988 contract by failing to deliver certificates
representing shares earned as a premium for legal work performed
between 1993 and 1996.
7
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
Certain statements contained in this Form 10-QSB constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. Such forward-looking statements herein are based on current
expectations that involve a number of risks and uncertainties. Such
forward-looking statements are based on assumptions that the Company will have
adequate financial resources to fund the development and operation of its
business, and there will be no material adverse change in the Company's
operations or business. The foregoing assumptions are based on judgments with
respect to, among other things, information available to the Company, future
economic, competitive and market conditions and future business decisions. All
are difficult or impossible to predict accurately and many of which are beyond
the Company's control. Accordingly, although the Company believes that the
assumptions underlying the forward-looking statements are reasonable, any such
assumption could prove to be inaccurate and therefore there can be no assurance
that the results contemplated in the forward-looking statements will be
realized. There are a number of risks presented by the Company's business and
operations which could cause the Company's financial performance to vary
markedly from prior results or results contemplated by the forward-looking
statements. Such risks include failure of the ANTs technology to work properly,
failure to develop commercially viable products or services from the ANTs
technology, delays of failure in fundraising efforts, delays in or lack of
market acceptance, failures to recruit adequate personnel, and problems with
protection of intellectual property, among others. Management decisions,
including budgeting, are subjective in many respects and periodic revisions must
be made to reflect actual conditions and business developments, the impact of
which may cause the Company to alter its capital investment and other
expenditures, which may also adversely affect the Company's results of
operations. In light of significant uncertainties inherent in forward-looking
information included in this quarterly Report on Form 10-QSB, the inclusion of
such information should not be regarded as a representation by the Company that
the Company's objectives or plans will be achieved.
OVERVIEW
We are engaged in the development and marketing of a proprietary,
software technology that is intended to significantly improve the speed at which
computers can process database transactions. Our operations currently consist of
research and development of our asynchronous non-pre-emptive tasking software
technology ("ANTs technology"), marketing our technology to potential customers
and partners, personnel recruiting, and capital raising. We have not realized
any revenues to date.
PLAN OF OPERATION
Our operations over the next six months will primarily consist of
continued research and development of our proprietary software technologies.
Research and development will be focused initially upon developing a prototype
system utilizing and demonstrating the capabilities of our technology. We
anticipate this prototype system to be completed during the third quarter of
calendar 2001. Thereafter, research and development will be directed towards
developing initial customer applications utilizing our technology. General
commercial applications utilizing our technology are expected to be available by
the end of calendar 2001.
The majority of our operating expenses and costs over the next three to
six months are expected to be for and in connection with existing and additional
personnel. We currently have fifteen employees and two consultants, and we are
recruiting additional personnel. We view the recruitment of additional qualified
technical personnel as essential to the further development and
commercialization of our proprietary technologies. Should we be successful in
our recruitment efforts, we expect that our personnel and other operating costs
will increase significantly over current levels.
We believe that additional sources of financing can be secured to
enable us to complete the development and commercialization of our proprietary
technologies, although there is no assurance of our ability to do so.
8
GENERAL AND ADMINISTRATIVE
General and administrative expenses increased from $750,171 during the
three months ended March 31, 2000 to $1,581,757 for the three months ended March
31, 2001. We expect that our general and administrative expenses will continue
to increase as additional staff is recruited. We intend to continue to focus
significant resources on recruiting additional personnel for engineering,
technical development, marketing and administrative roles. There can be no
assurances that we will be able to recruit the appropriate personnel necessary
for the development of our products.
RESEARCH AND DEVELOPMENT
Research and Development expenses increased from $15,271 during the
three months ended March 31, 2000 to $35,656 during the three months ended March
31, 2001. These expenses are related to the research, testing and product
development of our proprietary software.
CAPITAL AND LIQUIDITY RESOURCES
We anticipate significantly increasing expenditures over the coming
months as we continue to develop our technology. We do not expect to realize any
revenues through calendar year 2001. Our cash balance as of March 31, 2001 was
approximately $1.4 million, which we believe will be adequate to fund our
activities through August 2001 at our current rate of spending. There can be no
assurance that our continued product development and infrastructure development
will not require a much higher rate of spending. There can also be no assurance
that we will be able to obtain additional capital on acceptable terms.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We entered into a Settlement Agreement effective as of February 23,
2001 with the law firm Hughes Hubbard & Reed LLP ("HHR") pursuant to which we
agreed to issue 400,000 shares or our stock. HHR had filed suit against us in
the California Superior Court claiming that we breached a June 1988 contract by
failing to deliver certificates representing shares earned as a premium for
legal work performed between 1993 and 1996.
We were a defendant in a case entitled Hubert P. Lauffs v. Mosaic
Multisoft Corporation, in which the plaintiff asserted a cause of action against
us for breach of fiduciary duty. The plaintiff purported to base his cause of
action on allegations that we and others caused the shareholders of Mosaic
Multisoft Corporation ("Mosaic") to elect outside directors to its board of
directors who subsequently voted to remove Mosaic's president from office, thus
interfering with Mosaic's ability to raise capital and causing Mosaic to be
unable to repay its debt to the plaintiff. In March 2000, we won this case on
summary judgment. In April 2000, the plaintiff filed an appeal of the summary
judgment ruling. We believe the appeal to be without merit, but there can be no
assurance that the appellate court will not reverse the lower court's ruling and
require a trial. We have filed an action for malicious prosecution against the
lawyer and the plaintiff in this case. Since May 4, 2000, the malicious
prosecution action has been stayed pending resolution of the appeal. With
respect to the appeal, the plaintiff filed an opening brief on December 19,
2000, and we filed a responsive brief on April 4, 2001. The plaintiff has until
May 24, 2001 to file his reply brief. Following completion of the briefing, the
court of appeal will schedule the matter for oral argument.
On or about January 31, 2001, the British Columbia Securities
Commission ("B.C. Commission") requested that the Company provide information
regarding the distribution of securities to British Columbia residents to ensure
that such distributions were made in compliance with the British Columbia
Securities Act. We are working with the B.C. Commission to provide the requested
information.
9
ITEM 2. CHANGES IN SECURITIES
Since January 2001, we completed the sale, through a private offering,
of 113,500 units at a price of $2 per unit, each unit consisting of (i) One (1)
share of Common Stock of the Company, (ii) a warrant to purchase up to One (1)
share of Common Stock of the Company at a per share price of Three Dollars
($3.00), exercisable until April 30, 2001, and (iii) a warrant to purchase up to
One (1) share of Common Stock of the Company at a per share price of Four
Dollars ($4.00), exercisable until August 31, 2001. The gross proceeds of the
offering were $227,000. The related offering expenses were satisfied with an
additional 11,350 shares of common stock. The proceeds will be used for general
working capital purposes.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No changes during the period covered by this report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No changes during the period covered by this report.
ITEM 5. OTHER MATTERS
RESIGNATION AND APPOINTMENT OF OFFICER
Mr. Francis K. Ruotolo resigned as acting Chief Financial Officer as of
May 7, 2001. Mr. Michael W. O'Connor was appointed as interim Chief Financial
Officer by unanimous written consent of the Board of Directors on May 7, 2001.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation of the
Company as listed in Exhibit 3.1 to the Company's 10-KSB
filed on March 22, 2001, is hereby incorporated by
reference.
3.2 Amended and Restated Bylaws of the Company, as listed in
Exhibit 3.2 to the Company's 10-KSB filed on March
22, 2001, are hereby incorporated by reference.
(b) Reports on Form 8-K
On January 24, 2001, we filed a report on Form 8-K to disclose
that we filed an Agreement and Plan of Merger (the "Agreement") with the
Secretary of States of Nevada and Delaware in order to change our state of
incorporation to Delaware and that as a result of such re-incorporation in
Delaware, we changed our name from ANTs software.com to ANTs software inc. Such
report also disclosed that Dr. John H. Williams resigned as Chief Executive
Officer of the Company effective as of January 8, 2001, that Dr. Clive G.
Whittenbury resigned as Chairman of the Company effective as of January 8, 2001,
and that Mr. Francis K. Ruotolo was appointed President, Chief Executive
Officer, Chairman and a director of the Company by the Board of Directors of the
Company effective as of January 8, 2001.
RISK FACTORS
In addition to other information in this 10-QSB, the following risk
factors should be carefully considered in evaluating our business since we
operate in a highly changing and complex business environment that involves
numerous risks, some of which are beyond our control. The following discussion
highlights a few of these risk factors, any one of which may have a significant
adverse impact on our business, operating results and financial condition. As a
result of the risk factors set forth below and elsewhere in this 10-QSB, and the
risks discussed in our other Securities and Exchange Commission filings, actual
results could differ materially from those projected in any forward-looking
statements.
10
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, OUR COMPETITIVE
POSITION WOULD BE ADVERSELY AFFECTED. We rely on patent protection, as well as
trademark and copyright law, trade secret protection and confidentiality
agreements with our employees and others to protect our intellectual property.
Despite our precautions, unauthorized third parties may copy our products and
services or reverse engineer or obtain and use information that we regard as
proprietary. We have also filed patent applications and intend to file more. We
do not know if any of our intended future patents will be issued or whether we
will be successful in prosecuting any additional patents. In addition, the laws
of some foreign countries do not protect proprietary rights to the same extent
as do the laws of the United States. Our means of protecting our proprietary
rights may not be adequate and third parties may infringe or misappropriate our
patents, copyrights, trademarks and similar proprietary rights. If we fail to
protect our intellectual property and proprietary rights, our business,
financial condition and results of operations would suffer. We believe that we
do not infringe upon the proprietary rights of any third party, and no third
party has asserted a patent infringement claim against us. It is possible,
however, that such a claim might be asserted successfully against us in the
future. We may be forced to suspend our operations to pay significant amounts to
defend our rights, and a substantial amount of the attention of our management
may be diverted from our ongoing business, which can materially affect our
ability to attain and maintain profitability.
WE FACE POSSIBLE COMPETITION FROM LARGE COMPANIES. The industry that we
are in is highly competitive. Although we believe that our technology is unique,
can be protected, and, if adopted, will confer benefits that will be otherwise
unavailable for some significant time, we face very large competitors with
greater resources who may adopt various strategies to block or slow our market
penetration, thereby straining our more limited resources. They may also seek to
hinder our operations through attempts to recruit key staff with exceptionally
attractive terms of employment, including signing bonuses, or by offer of highly
competitive terms to potential or newly acquired customers.
WE DEPEND ON OUR KEY PERSONNEL AND MAY HAVE DIFFICULTY ATTRACTING AND
RETAINING THE SKILLED STAFF WE NEED TO EXECUTE OUR GROWTH PLANS. Our success
will be dependent largely upon the personal efforts of our Chairman and Chief
Executive Officer, Francis K. Ruotolo, as well as other senior managers. The
loss of key staff could have a material adverse effect on our business and
prospects. To execute our plans, we will need to hire and retain substantially
more staff. We plan to increase our technical personnel in the near term. We are
recruiting personnel to meet this objective. Competition for highly skilled
employees with technical, management, marketing, sales, product development and
other specialized training is intense. We may not be successful in attracting or
retaining such qualified personnel. Specifically, we may experience increased
costs in order to attract and retain skilled employees. If we are unable to
hire, train and manage new skilled and experienced employees as needed, we would
be unable to support our planned growth and future operations.
WE FACE RAPID TECHNOLOGICAL CHANGE. The market for our products and
services is characterized by rapidly changing technologies, extensive research
and the introduction of new products and services. We believe that our future
success will depend in part upon our ability to continue to enhance our existing
products and to develop, manufacture and market new products and services. As a
result, we expect to continue to make a significant investment in engineering,
research and development. There can be no assurance that we will be able to
develop and introduce new products and services or enhance our initial intended
products and services in a timely manner to satisfy customer needs, achieve
market acceptance or address technological changes in our target markets.
Failure to develop products and services and introduce them successfully and in
a timely manner could adversely affect our competitive position, financial
condition and results of operations.
WE WILL NEED TO MANAGE GROWTH WELL. We may experience substantial
growth in the size of our staff and the scope of our operations, resulting in
increased responsibilities for management. To manage this possible growth
effectively, we will need to continue to improve our operational, financial and
management information systems and to hire, train, motivate and manage a growing
number of staff. We expect to experience difficulty in filling our needs for
qualified engineers and other personnel. There can be no assurance that we will
be able to effectively achieve or manage any future growth, and our failure to
do so could delay product development cycles and market penetration or otherwise
have a material adverse effect on our financial condition and results of
operations.
11
WE COULD FACE INFORMATION AND PRODUCT LIABILITY RISKS AND MAY NOT HAVE
ADEQUATE INSURANCE. Because we intend to provide middleware solutions to
critical business and Internet applications, we may become the subject of
litigation alleging that our products were ineffective or disruptive in their
treatment of data, or in the compilation, processing or manipulation of critical
business information. Thus, we may become the targets of lawsuits from injured
or disgruntled businesses or other users. We do not presently carry product or
information liability or errors and omissions insurance, and although we intend
to acquire such insurance prior to commencing substantial sales, such insurance
may not be available in an acceptable or affordable form. In the event that we
are required to defend more than a few such actions, or in the event that we
were found liable in connection with such an action, our business and operations
would be severely and materially adversely affected.
WE ARE DEPENDENT ON NEW DEMAND FOR OUR PRODUCTS AND SERVICES. The
success of our business depends upon demand for and use of our technology,
products and services in general and the demand for additional computing power,
cost effectiveness and speed in particular. Our technology introduces a new kind
of middleware, so we may encounter substantial market resistance. In the event
sufficient demand does not develop, our business and results of operations would
be materially adversely affected. We believe that there appears to be increased
demand for computing power, cost effectiveness and speed, but if general
economic conditions decline or hardware and memory advances make such power,
cost effectiveness and speed more readily available, then adoption, use and
sales of our products and services may be materially adversely affected.
WE WILL NEED TO CONTINUE OUR PRODUCT DEVELOPMENT EFFORTS. We believe
that our market will be characterized by increasing technical sophistication. We
also believe that our eventual success will depend on our ability to continue to
provide increased and specialized technical expertise. There is no assurance
that we will not fall technologically behind competitors with greater resources.
Although we believe that we enjoy a significant lead in our product development
and introduction, and are hopeful that our patents provide some protection, we
will likely need significant additional capital in order to continue to enjoy
such a technological lead over competitors with more resources.
A FAILURE TO OBTAIN ADDITIONAL FINANCING COULD PREVENT US FROM
EXECUTING OUR BUSINESS PLAN. We anticipate that current cash resources will be
sufficient to fund our operations through August 2001. We believe that
additional sources of financing can be secured to enable us to complete the
development and commercialization of our proprietary technologies, although
there is no assurance of our ability to do so. A failure to obtain additional
funding could prevent us from making expenditures that are needed to allow us to
hire additional personnel and continue development of the technology. If we
raise additional funds by selling equity securities, the relative equity
ownership of our existing investors could be diluted or the new investors could
obtain terms more favorable than previous investors. If we raise additional
funds through debt financing, we could incur significant borrowing costs.
MARKET ACCEPTANCE OF OUR PRODUCTS AND SERVICES IS NOT GUARANTEED. We
are at an early stage of development and our earnings will depend upon broad
market acceptance and utilization of our intended products and services. There
can be no assurance that our product and technology development efforts will
result in new products and services, or that they will be successfully
introduced.
FUTURE PROFITABILITY IS NOT GUARANTEED. We have not recognized any
operating revenues to date. We expect to begin recognizing revenues from the
sale of products and services in calendar 2002. There is no assurance that our
plans will be realized, that we will be able to generate revenues in 2002 or
that we will achieve profitability in the future.
LIMITED MARKET FOR OUR COMMON STOCK. Our common stock is not listed on
any exchange and trades in the over-the-counter (the "OTC") market. As such, the
market for our common stock is limited and is not regulated by the authorities
of any exchange. Further, the price of our common stock and its volume in the
OTC market may be subject to wide fluctuations.
12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANTs software inc.
Date: May 15, 2001 By: /s/ Francis K. Ruotolo
------------------------------------------
Francis K. Ruotolo, Chairman,
Chief Executive Officer and President
Date: May 15, 2001 By: /s/ Michael W. O'Connor
------------------------------------------
Michael W. O'Connor,
Interim Chief Financial Officer
13